ECB’s Villeroy: Economic Developments Justify End of Interest Rate Hikes

31 October 2023

By Isabel Teles – FRANKFURT (Econostream) – European Central Bank Governing Council member François Villeroy de Galhau on Tuesday said that the ECB’s decision last week not to continue hiking interest rates was justified by economic developments.

In post on LinkedIn, Villeroy, who heads the Banque de France, said that the current state of the economy ‘fully justifies the end of the sequence of rate increases decided by the Governing Council last Thursday.’

‘[U]nderlying inflation (excluding energy and food) also continues to decline: at 4.2% in the Eurozone and even less in France, it has clearly passed its spring peak’, he said. ‘This is a strong sign of the effectiveness of monetary policy.’

‘Provisional figures for October show a marked deceleration of inflation in France, as in the Eurozone’, he noted.

Despite a slowdown, the French economy showed a certain resilience in the third quarter of 2023, he said.

Monetary policy required patience ‘with the stabilisation of interest rates at their current level, for a period still necessary for their full effectiveness’, he said.